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Question
The local supermarket buys lettuce each day to ensure fresh produce. Each morning any lettuce that is left from the previous day is sold to a dealer that resells it to farmers who use it to feed their animals. This week the supermarket can buy fresh lettuce for $5.00 a box. The lettuce is sold for $12.00 a box and the dealer that sells old lettuce is willing to pay $1.50 a box. Past history says that tomorrow's demand for lettuce (Normally distributed) averages 200 boxes with a standard deviation of 35 boxes.
1. What are the unit underage cost and overage cost?
2. How many boxes of lettuce should the supermarket purchase tomorrow?
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